7. FINANCIAL PLAN

* Calculations use average data for Russia

1. PROJECT SUMMARY

The goal of the project is to organize a newspaper publication in Nizhny Novgorod. The newspaper is published under the name "Nizhny Novgorod Businessman". Target audience - heads and top managers of organizations, individual entrepreneurs. Content - information about the business community in the region, an overview of legislation in the field of entrepreneurship. The collection of information is carried out by full-time journalists. Printing is outsourced to a printing house. The distribution of the newspaper is free, the publishing house's income is provided by the provision of services for the placement of advertisements. In support of the paper edition, an Internet portal is being created, which contains the archive of issues, the announcement of the latest issue, materials not included in the issue, as well as information for advertisers with the possibility of ordering advertising services online.

Given the relatively high profitability, low level of investment costs, low level of competition, the project is cost-effective. The main performance indicators are given in Table. one.

Table 1. Indicators of economic efficiency of the project

2. DESCRIPTION OF THE ENTERPRISE AND INDUSTRY

Publishing (publishing) is a branch of the economy that specializes in the preparation, creation, publication and mass distribution of information in print, music and other forms of production. Historically, it specialized in printed products, but with the development of technology, it began to cover the publication and distribution of information in electronic form - on digital media, in information networks, etc.

According to Roskomnadzor, at the beginning of 2016, more than 8 thousand mass media were registered in Russia, of which 65% are print media - newspapers (28%) and magazines (37%). Next come the online media - 11%, television - 10%, radio - 7%.

In general, the industry has seen constant growth in the number of players. Since 1990, all major media outlets have increased their numbers annually; the only drop in growth was for some types of media in 2004-2005.

Figure 1. Number of registered media outlets by main categories in Russia in 1990-2015, pcs.

Despite the steady growth in the number of media outlets in the newspapers and magazines categories, in general, the demand for their products has been declining in recent years. The situation worsened in 2015. Experts, first of all, attribute this to a decrease in the solvency of the population against the backdrop of rising prices for printed products - there was an increase in the cost of paper, printing ink, printing plates and other materials. The population, spending more than 50% of their income on food, refuses non-essential goods, which, of course, include the printed press. At the same time, for the IV quarter of 2015, prices for it increased by 5%, and in January 2016 there was an increase of another 2% compared to December 2015. Some periodicals, however, saw a decline in retail prices. In particular, the decrease occurred in such groups as daily and business press, youth and advertising publications, health publications, collection and business magazines. Such categories as magazines for mothers, needlework, cookery, popular science magazines have grown in price. For the second half of 2016, experts expect price growth to be contained due to falling demand – the growth will be about 1-2%.

Due to the rise in prices for print media, there is a logical shift in demand towards online media with free access. A decrease in market capacity is predicted both in monetary and physical terms (Fig. 2).

Figure 2. Forecast for the development of the print media industry in Russia for 2016, million rubles and billion copies

According to the Association of Printed Products Distributors (ARPP), in 2015 the volume of print media distributed at retail decreased by 15% in physical terms, and those distributed by subscription - by 16%. The print media advertising market fell by 29%, which led to a significant decrease in publishers' profits.

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Legislative restrictions also influenced the decline in the investment attractiveness of the publishing business in Russia. The first of these is a ban on advertising in the print media of certain types of goods, which significantly reduced the number of potential advertisers. It is estimated that the ban on advertising of tobacco and alcohol has reduced the income of publishers by 15-20%. The second is the Federal Law of October 14, 2014 “On Amendments to the Law of the Russian Federation “On the Mass Media””, which established the maximum volume of foreign capital shares in the Russian media business at 20%. As a result, many international publishing houses were forced to reduce business activity and close a number of successful publications.

The main trend of recent years in the print media is the creation of electronic versions of their publications. This allows you to create a symbiosis aimed at expanding the audience and attracting advertisers, the share of profit from which is on average 48%; 51% - income from the retail sale of publications, 1% - from subscriptions to electronic publications.

Figure 3. Newspaper audience distribution by platform, 2015 (According to the Association of Audited Media)

Despite the general trend of declining demand throughout the country, Nizhny Novgorod Businessman is a niche product capable of providing a fairly high level of demand. Since the newspaper is distributed free of charge, the level of solvency does not affect the volume of consumption. The cost of advertising services is at the average market level, and the content of the publication is of high quality, which ensures high reader loyalty.

The enterprise is located in the city of Nizhny Novgorod, the population of which is 1.3 million people. Nizhny Novgorod is an important economic, industrial and cultural center of Russia, as well as the largest transport hub. The city is home to the largest metalworking and mechanical engineering enterprises. The main volume of production falls on the automotive industry and shipbuilding, as well as the production of weapons. Investments in fixed capital in January-March 2016 amounted to 12.7 billion rubles. The largest share in the structure of investments in fixed assets is occupied by investments: in real estate operations, rent and provision of services (34.8%), in transport and communications (23.7%), in manufacturing industries (16.7%). To date, about 3.8 thousand organizations (legal entities) are registered in the city; there are no statistics on individual entrepreneurs. The total turnover of organizations in 2015 amounted to 2.0 trillion. rubles. The potential market capacity, therefore, is from 3.5 to 5.0 thousand copies.

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Journalists monitor the press, get acquainted with press releases of large enterprises in the region, conduct interviews with entrepreneurs, managers and employees of small, medium and large businesses. In general, the content of the publication can be divided into such categories as: a review of the regional business community, events in it, changes in legislation, a review of upcoming and past events (forums, exhibitions, fairs, etc.), articles from readers (on a paid basis).

Printing of the publication is outsourced. A3 coated paper is used for printing, full color printing. The issue consists of 24 pages, circulation - 2500 copies. Delivery and distribution is carried out with the involvement of a specialized organization.

3. DESCRIPTION OF SERVICES

As services of the Nizhny Novgorod businessman publication, one can consider both the provision of specialized content to readers of the newspaper, and the provision of services for the placement of modular advertising in the newspaper and on the website.

The content is created by the publication's staff journalists based on monitoring of the press, websites of enterprises, the regional administration, interviews with entrepreneurs and representatives of government agencies. The value of content is due to its relevance, the fact that entrepreneurs and top managers receive up-to-date information about the state of the regional market, get acquainted with innovative solutions, ideas, innovations and changes in legislation. Additional value is provided by the objectivity of the presentation of information, the professionalism of presentation and analytics.

Table 2. Services of the company and their cost

The cost of the modules is indicated taking into account placement for a month (2 issues); advertising banner on the site - the cost of monthly placement. The cost of the module and banner depends on its size; the dependence is non-linear, taking into account demand and potential information value.

An advertising article is printed on the basis of the material provided by the customer and can be both openly advertising and informational. If necessary, the material is processed by the journalists of the publication to make it more attractive.

4. SALES AND MARKETING

The distribution of the newspaper among the readers takes place with the help of direct mailing on the basis of open information about operating organizations. In case the organization does not want to receive the newspaper, it can inform about it at any time by phone or e-mail. Contact details are indicated on the last page of the newspaper.

business services

goods for business, non-specialized equipment

"premium" class goods, "status" items (watches, cars, etc.)

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The potential market capacity is 3.5-5.0 thousand copies, taking into account large individual entrepreneurs that are not included in official statistics. The actual capacity corresponds to the potential. The available capacity is limited by industry characteristics of some organizations, as well as the preferences and psychological characteristics of entrepreneurs and top managers, and amounts to 2.5 thousand copies, which serves as the basis for planning the circulation of the newspaper.

Given the developed economy of the region, problems with the sale of advertising opportunities are not expected. 100% occupancy of the modules is expected in 6 months from the start of sales. Demand is not subject to seasonal fluctuations, but is very sensitive to the economic situation.

It is supposed to form an effective customer base with a share of regular customers of at least 30%, while in the most expensive modules (10/60, 30/60, 60/60) this share should be at least 67% (2/3 of the total volume). This will ensure the financial stability of the enterprise.

Currently, there are 5 competitors on the market, of which two can be classified as direct and key (Gorod NN, Delovoy vestnik). These are business publications providing information about the region's business community. However, Delovoy Vestnik is more focused on rewriting other publications, including federal ones. Gorod NN provides author's information, but does not conduct analytics due to the lack of correspondents' sufficient knowledge in the field of economics.

Also, one of the indirect competitors, Krasny Kvadrat, a glossy magazine that provides information about the city's events aimed at entrepreneurs, as well as information about goods and services in the premium segment, can be attributed to the key ones. The magazine has a circulation of 5.0 thousand copies, 48 ​​pages, high-quality printing, and an established client base.

Thus, it is necessary to ensure the implementation of a long-term strategy to attract both new customers and customers of competitors. The basis for this can be a flexible pricing policy, which involves test placement of ads for 1 month, as well as discounts for regular customers. In general, the pricing policy of Nizhny Novgorod Businessman assumes that prices are on average 10% lower than those of key competitors.

5. PRODUCTION PLAN

The circulation of the newspaper is planned taking into account the available capacity of the distribution market - 2.5 thousand copies. The newspaper is published twice a month. Printing is carried out in the Golden Key printing house on the basis of a service agreement. All consumables are provided by the contractor.

Printing is carried out on European-made equipment, which allows for an attractive appearance. Each issue consists of 24 pages, full-color printing on coated paper. The printed material is packed into bundles, then transferred to the delivery service, which distributes it to the organizations of the city.

The layout of the issue is carried out by the specialists of the Nizhny Novgorod Businessman, the material is transferred to the printing house at least 3 days before the release of the issue.

Planned production volumes correspond to the number of advertising modules and banners (Table 2). A detailed production plan is given in App. 1 to this business plan.

6. ORGANIZATIONAL PLAN

The management of the enterprise is carried out by the director. For this position, a candidate with at least 3 years of experience in managing a printed publication is selected. All staff report directly to the director.

Since the development strategy of the publication assumes high quality content, especially high requirements are placed on journalists. It requires not only knowledge of journalism, communication skills, the ability to find the right information, but also knowledge of the basics of entrepreneurship and economics for the full disclosure of published topics.

Sales specialists are responsible for the income of the enterprise, therefore, they are also subject to serious requirements: experience in sales of advertising services from 3 years, responsibility, communication skills, ability to work with clients both by phone and on the road.

The staffing and wage fund are given in Table. 3.

Table 3. Staffing and payroll

7. FINANCIAL PLAN

The financial plan is designed for a five-year period and takes into account all types of costs and income. Based on the analysis of several options, a limited liability company was chosen as the form of ownership, the taxation system was the simplified tax system with the object of taxation "income" (6% rate).

Investment costs are understood as one-time investments in tangible and intangible assets. In this project, the bulk of investments are directed to office equipment and to the development of a website. In addition, it is planned to create a working capital fund to cover their deficit until the company reaches payback. The total amount of investment costs is 1,050,000 rubles, of which 500,000 rubles are the project initiator's own funds. The remaining amount is planned to be received in the form of a bank loan for a period of 24 months at a rate of 20% per annum. The loan is repaid by annuity payments, credit holidays - 3 months. The list of investment costs is given in Table. 4.

Table 4. Investment costs of the project

All current expenses of the enterprise are attributed to fixed costs, since there is no clear relationship between expenses and the volume of advertising modules sold. The main item of current expenses is the production and distribution of circulation (Table 5 shows the monthly cost of production and distribution, i.e. two issues, or 5.0 thousand copies). The general list of fixed costs is given in Table. 5. A detailed financial plan is given in App. 2 of this business plan.

Table 5. Fixed costs of the project

8. PERFORMANCE EVALUATION

Evaluation of the effectiveness and investment attractiveness of the project is carried out on the basis of an analysis of the financial plan, financial results, cash flow and integral performance indicators. Integral performance indicators are given in Table. one.

To take into account the time value of money, the impact of inflationary processes, as well as possible risks for the project, a discount rate of 18% is used. Such a rather high value, against the background of high performance indicators, indicates the high financial stability of the enterprise and its potentially high interest for the investor.

The simple and discounted payback period of the project is 7 months. Net present value (NPV) - 16.1 million rubles, which significantly exceeds the volume of investments. The internal rate of return (IRR) is 19.89%, which is above the discount rate. The yield index is 15.37 > 1. All these figures clearly indicate the high investment attractiveness of the project.

9. RISKS AND WARRANTY

All risks can be divided into internal and external. can be classified as internal.